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Tsvetkova A.A. The general equilibrium model of the Russian economy with the financial sector and elements of fiscal policy
Macroeconomic analysis and forecasting play an important role in modern economies, as they help to develop models for economic policy. Governments and central banks use two types of models: econometric models based on multidimensional time series Vector Autoregressive (VAR) models and theoretical models that take into account the economic structure, such as General Equilibrium (GE) models. GE models describe the development of the economy through the interaction between several economic agents, each solving its own optimization problem. Dynamic GE models, in particular, take into account changes in macroeconomic indicators and produce forecasts that are more accurate than those produced by common VAR models, often achieving accuracy that is close to or superior to them. This paper discusses methods for modeling the financial sector, fiscal and monetary policy in Dynamic Stochastic General Equilibrium (DSGE) models. A DSGE model with five agents and without stochastic components is constructed, which allows a complete analytical solution to be obtained. The impact of external influences on the dynamics of the macroeconomic indicators of the model is analyzed. The accuracy of forecasts made by this model are compared to that of alternative macroeconomic VAR models. The purpose of this research is to develop a Dynamic General Equilibrium model for the Russian economy, including the fiscal sector and fiscal and monetary policies. Additionally, the model will take into account the emission channel of monetary creation, which has not been widely discussed in the academic literature.